Legislature(2021 - 2022)GRUENBERG 120
05/18/2021 03:00 PM House STATE AFFAIRS
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HB 94-PROHIBITED COMMERCIAL LEASE PROVISIONS 3:55:59 PM CHAIR KREISS-TOMKINS announced that the next order of business would be HOUSE BILL NO. 94, "An Act prohibiting the use of certain restrictive provisions in leases of space for business use in certain federally established zones; and adding an unlawful act to the Alaska Unfair Trade Practices and Consumer Protection Act." 3:56:21 PM PAUL LABOLLE, Staff, Representative Neal Foster, Alaska State Legislature, on behalf of Representative Foster, prime sponsor, introduced HB 94. He paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: HB 94 adds a prohibitive lease provision to the list of Unlawful Acts and Practices under Alaska's Unfair Trade Practices and Consumer Protection Statute. This new provision eliminates restrictive covenants in leases of space for business use. The spirit of the bill is to increase competition in Alaska. The bill prohibits contract clauses that prevent or limit either party's ability to participate in businesses that compete with the other party. Many of Alaska's businesses are small. When large companies contract with these businesses they are able to leverage unfavorable terms that are designed to limit competition. HB 251 aims to prevent that and improve competition in Alaska's economy. The measure would apply in historically underutilized business zones established by the United States Small Business Administration under 15 U.S.C. 657a (HUBZone Act of 1997). CHAIR KREISS-TOMKINS welcomed invited testimony. 3:57:30 PM REPRESENTATIVE TARR requested an example to help her fully understand the implications of the proposed legislation. 3:57:54 PM NICK MOE, Azachorok Inc, provided a real-life example of the noncompete clause that the bill would address, explaining that Azachorok Inc was not allowed to sell similar items below the high prices set by a company they are tied to by a commercial lease agreement. He opined that HB 94 would encourage competition in the free market, help drive down high prices, and help local businesses. He urged the committee to support the proposed legislation. CHAIR KREISS-TOMKINS asked whether the company in question was the Alaska Commercial Company. MR. MOE confirmed. 4:01:59 PM REPRESENTATIVE TARR gathered that if a village corporation was leasing space for a small food store, their prices would have to be based on the prices set by the "parent company" that they lease from. She asked if that was correct. MR. MOE answered yes, with a huge markup. 4:02:53 PM REPRESENTATIVE KAUFMAN asked whether there was "some unfair aspect" that could be an unintended consequence of the legislation, such as a nonprofit selling goods that would undercut a commercial operation simply because it was operating as a nonprofit. MR. LABOLLE said that was not the intent of the bill. He offered to follow up with the requested information. REPRESENTATIVE KAUFMAN, attempting to clarify his question, asked whether the bill would assure equal opportunity in trade if it were to pass. CHAIR KREISS-TOMKINS asked Mr. Moe if he was aware of similar situations in other communities. MR. MOE said he had heard of this problem persisting everywhere that the Alaska Commercial Company operates. 4:05:14 PM REPRESENTATIVE CLAMAN asked whether the intent of the bill was to make the treble damages provisions of the Deceptive Trade Practices Act applicable in this instance. MR. LABOLLE stated that the bill was drafted so it would apply to any portion of the "unfair labor practices." REPRESENTATIVE CLAMAN sought to confirm that Mr. Labolle was referring to unfair trade practices. MR. LABOLLE clarified, "'The unlawful acts and practices' under Alaska's unfair trade practices and consumer protection statutes." 4:05:53 PM CHAIR KREISS-TOMKINS announced HB 94 was held over.